Plans by several crude oil-consuming countries to release the stocks from the strategic petroleum reserves (SPR), outbreak of Covid in China and its impact on the demand for the energy fuel, and the hawkish stance of the US Federal Reserves pulled down crude oil futures on Friday morning.

At the time of filing this report, June Brent oil futures were at $99.98, down by 1.07 per cent, and May crude oil futures on WTI were at $95.61, down by 0.44 per cent. Brent crude oil has declined by over four per cent this week.

April crude oil futures were trading at ₹7,270 on Multi Commodity Exchange (MCX) during the initial hours of trading against the previous close of ₹7,278, down by 0.11 per cent, and May futures were trading at ₹7,250 against the previous close of ₹7,252, down by 0.01 per cent.

Russia-Ukraine conflict

The Russia-Ukraine war has made many countries, including the US and the UK, to impose sanctions on Russia. This has made an impact on the supply of crude oil from Russia, one of the major oil-producing nations in the world. Recently, the US announced its decision to release 180 million barrels of crude oil from its SPR. Following this, the member countries of the International Energy Agency (IEA) decided to release around 60 million barrels from their SPRs. This move was aimed at cooling down the crude oil price in the global market, which had gone up following the tight supply due to sanctions on Russia.

Price of the crude oil was also impacted by the demand concerns in China as Shanghai went for a lockdown following the outbreak of Covid in the country. China is one of the major consumers of crude oil in the world.

Plans by the US Fed Reserve for an aggressive tightening of the US monetary policy to combat inflation has boosted the dollar and affected the demand for risk assets such as crude oil. A stronger dollar leads to the oil price more expensive for those holding other currencies.

In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said crude oil settled on a weaker note in the international markets on Thursday as WTI crude settled at $96.62 per barrel and Brent settled at $100.58 per barrel. Domestic markets settled on a weaker note at ₹7,250 per barrel, down by 1.99 per cent.

India, the world's third largest oil importer, said on Thursday it was examining ways to support decisions by the IEA member countries to release crude from their national inventories to calm rising global prices, he said.

“We expect crude oil prices to remain volatile to negative in today’s session after consuming nations announced a huge release of oil from emergency reserves. Crude oil is having support at $92.40-$90.80 and resistance is at $98.20–100.50, In rupee terms crude oil has support at ₹7,050-6,860; while resistance is at ₹7,440–7,610,” he said.

April natural gas futures were trading at ₹484 on MCX in the initial hour of Friday morning against the previous close of ₹476.70, up by 1.53 per cent.

Dhaniya, turmeric lose aroma

On the National Commodities and Derivatives Exchange (NCDEX), April dhaniya futures were trading at ₹12,602 during the initial hours of trading against the previous close of ₹12,860, down by 2.01 per cent.

April turmeric (farmer polished) contracts were trading at ₹9,630 against the previous close of ₹9,768, down by 1.41 per cent.

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